Michael J. Rosen

Michael J. Rosen is President of ML Innovations, Inc., a fundraising and marketing consulting firm serving nonprofit organizations and the companies that assist them. An AFP Certified Master Trainer and winner of the prestigious AFP/Skystone Prize for Research, Michael is the author of the bestselling book "Donor-Centered Planned Gift Marketing."

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Do Not Make This Year-End #Fundraising Mistake

The fourth quarter of the calendar year is a popular time for charities to send out fundraising appeals. As a result, nonprofit organizations raise a lot of money during the fourth quarter. In addition, many nonprofit organizations host galas in the fourth quarter. Love it or hate it, #GivingTuesday is in the midst of the holiday season.

‘Tis the season to fundraise.

If you doubt that, just Google “year-end fundraising.” You’ll get over 20 million results!

Unfortunately, despite all of the terrific how-to articles, blog posts, books, webinars, and seminars, most nonprofit organizations continue to make a massive year-end fundraising mistake:

They overlook planned giving.

When developing a year-end fundraising strategy, most charities fail to include planned giving for a variety of reasons including:

They don’t have a planned giving program.

They think all planned gifts are deferred.

They think that planned gifts are not time-of-year sensitive.

Let’s take a moment to look at the above reasons more closely.

If your charity does not have a planned giving program, it probably should, assuming you have individual donors. The effort does not need to be elaborate or fancy. The most common planned gift is the simple Charitable Bequest through the donor’s will.

While Bequests are the most common type of planned gift, not all planned gifts are deferred. Don’t over think it. Planned gifts are simply any gift that requires planning. Here are some examples of planned gifts that result in current, rather than deferred, giving:

When a donor makes a gift of appreciated stock or personal property, she can avoid capital gains tax and receive a charitable gift deduction. Sadly, many fundraising professionals believe that individuals with appreciated stock or property somehow already know about the advantages of gifting such assets. However, that’s not always the case. Consider this true story from my book, Donor-Centered Planned Gift Marketing:

A member of the board of a scholarship foundation was approached at a cultivation event by a modest donor who wanted to give a $5,000 cash gift. The board member thanked the donor but asked, ‘Do you own any appreciated stock?’ The donor was a bit puzzled by the question, but replied, ‘Yes, I do. Why do you ask?’ The board member then explained that if the donor contributed appreciated stock valued at $5,000, rather than cash, she could avoid the capital gains tax, thereby resulting in a savings. The donor replied, ‘I can avoid giving my money to the government, by giving the foundation stock? That’s a great idea! And, since I really don’t need the money, why don’t I just increase my gift by the amount I’ll save in taxes?’ She did exactly that. However, her generosity did not end there. She was so moved by the work of the foundation and the good advice she had received that allowed her to avoid some capital gains tax that she consulted with her family and her advisors eventually giving over $15,000 to create a namesake scholarship fund.”

Since over half of all Americans own stock (Gallup, 2015), it’s very likely that some of your donors are in a position to donate appreciated securities to your organization. They just need to understand how they can benefit and what the mechanics are.

Gifts from a Donor Advised Fund:

Many donors have established a Donor Advised Fund. In 2013, there were 217,367 Donor Advised Funds (National Philanthropic Trust, Donor Advised Fund Market Report 2014). Those funds made grants of $9.66 billion in 2013.

If you know that a donor has established a Donor Advised Fund, ask him to designate your charity for a grant. In your newsletter, include a story about a supporter who has given through her Donor Advised Fund. On your website, include a Donor Advised Fund widget like the International Planned Parenthood Federation / Western Hemisphere has. For information about how to get the Donor Advised Fund widget for your organization’s website, click here.

Gifts from an IRA Rollover:

Provided the federal government renews the provision, older individuals will be able to donate money from their IRA accounts. While the government is once again waiting until the last minute to renew the provision, it is nevertheless likely to be renewed.

Furthermore, the Senate wants to approve the IRA Rollover for two years while the House wishes to make it permanent. So, when it comes to promoting the IRA Rollover, charities may have greater flexibility next year and/or in years to come. However, for this year, it’s likely to be a year-end scramble.

The planned gifts that I’ve described above are planned gifts that will result in current giving to your organization.

While planned giving is not necessarily time sensitive, and people make planned gifts throughout the year, year-end is a good time to encourage certain types of planned giving. For example, many people who own stocks rebalance their portfolios toward the end of the year. Also, the IRA Rollover will not even become an option until later in the year, if at all. Educating donors about these giving opportunities and asking for such gifts in the fourth quarter can help you achieve your year-end fundraising goals.

While people tend to draft a will or update a will based on life events (i.e.: marriage, birth of child, birth of a grandchild, illness, etc.), some will choose to write or update a will toward the end of the year. This is particularly true if there is a promotional campaign to encourage individuals to take action.

Free Wills Month brings together a group of well-respected charities to offer members of the public aged 55 and over the opportunity to have their simple Wills written or updated free of charge by using participating solicitors [lawyers] in selected locations around England and Wales.”

If your community, region, or nation has a broad year-end legacy-giving promotion campaign, your organization would be wise to consider participating in the effort in some way. While Bequest gifts result in deferred giving, they certainly help provide future security for charities.

If your organization has not made the mistake of ignoring gift planning at year-end, how has it incorporated planned giving into its year-end fundraising strategy? If your organization has made the all too common mistake, why haven’t you incorporated planned giving into your year-end fundraising strategy?

That’s what Michael Rosen says… What do you say?

[Publisher’s Note: In case you missed it, be sure to checkout my recent post: “Extra! Extra! Updates to 6 Popular Posts.” In it, I share updated information about a major gift from Bill Cosby, tax plans from presidential candidates, the IRA Rollover, and more. Also, I want to mention that the Keep Calm coffee mugs in the above photo were made by The Management Centre. To read a guest post from Bernard Ross, Director of The Management Centre, click here. For a post about Bernard’s AFP presentation revealing the next big thing in fundraising, click here.]

3 Responses to “Do Not Make This Year-End #Fundraising Mistake”

Excellent points here. People need to understand that giving isn’t necessarily as simple as writing something down, there is some paperwork and planning and due dates involved. It’s important to be on top of things as we get closer to the end of the year!

Jordan, thank you for your kind comment. One of the challenges with “year-end” giving, as you’ve mentioned, is that some gifts can be somewhat complex and require paperwork, planning, and transfers. That means, despite the fact I’ve used the term “year-end,” we can’t really wait until the year is about to expire. Some gifts will not work if they come in on December 30. So, fundraising professionals and donors both need to allow enough time to ensure that the gift can be completed by the close of the year. Thanks for raising the important timing issue.